Member Info for cyan2

Wonderful news and about as good as could be expected.

Its all about getting hold of our share of the cash. Will the Itallians be nice and pay up promptly?

Ocelot continually posts about high gas prices; fro example;

"Winter 23 natural gas is at 679p."

Simple questions; why is Sanderson dragging his feet over a Loxley drill?

Why is he trying to farm out which would give away a huge chunk of its potential value?

Didn't he want to keep the 'riches' all for UKOG?

Answer; He has more doubts about the £7m drill and its chances than he is letting on.
UKOG's RNS announcing the plan to try and farm out did use the word "uncertainty"
All the money spent arguing the case and now nothing but the hope someone will take UKOG's data at face value and gamble in Loxley.

Seen it all before. There are other companies with better PROVEN assets who can not attract farmins. I think Loxley will never be drilled.

Sanderson would rather spend millions planning a lunatic BILLION pound gas storage pipe dream than gamble on Loxley coming good.

I think the last time I posted a "sell" opinion was with XEL before their demise.

Ocelot quotes; "Should we prove commerciality, and we would know this within months, not years"

Well that might be the case IF Sanderson was fully committed to drilling Loxley ASAP and not spending cash on hydrogen storage planning .
Loxley now depends on a farmin.
UKOG RNS 20th July ;
"..the Company will now implement a pre-planned farmout programme, whereby the Company's costs would be either fully or part carried by any farminee. The Company believes that this is the most prudent course of action to both manage uncertainty and to help ensure the best use of the Company's working capital."

"uncertainty", "best use of the Company's working capital"

Sanderson thinks chasing gas storage is the "best use of the Company's working capital" ?

Loxley is going nowhere fast, imo. How many other companies have PROVEN assets that have been waiting years and years to be farmed out.? Look at JOG & PMG for examples.

The salt cavern storage project is Sanderson being grandiose again. He is not running a FTSE 100 company with cash to burn.
Sanderson proposes to spend "a modest" ,his words, "FEW MILLION " over the next TWO years seeking planning permissions for a mind bogglingly expensive hydrogen gas project whose economic (profitability) case is opaque BUT will cost north of ONE BILLION pounds.

See this RNS extract from 20th July 2022;
"....the updated expected capital cost to construct the 14 salt caverns, related surface facilities and the pipeline tie-in to the current national gas grid is GBP895 million. Together with the capital expenditure for the envisaged LNG receiving terminal and the project's green hydrogen generation capability, the project's total cost will, therefore, likely exceed GBP1 billion."

Its insane. Another crazy dream chase.

Time scale to potential START of construction is 4 years! Bet that time slips if it ever happens.

Listen to Sanderson here; https://www.youtube.com/watch?v=qLFkt9iBijY

UKOG should be using those "modest" "few million" being blown on PP for gas storage for drilling Loxley. Sanderson's reluctance to drill alone at loxley suggests to me that Sanderson is not that confident in the economic case of Loxley.

UKOG's open offer failed last year (10% take up)leaving them circa £4.2 m short of what they would like to have raised.

To fund both the Turkish drilling campaign AND getting PP for gas storage means millions of pounds needs to be raised.

UKOG are on their financial uppers. They had to do that emergency £1.25 m placing and have signalled another raise in within maybe 12 weeks.

Next raise looks likely to be highly dilutive, imo.

Penguins wrote:
"Ocelot has no idea what the risk reward is for Loxley - for reward you'd need to know the cost of appraisal and development, ....."

UKOG gave figures for an appraisal drill and possible full field development in their evidence at the Loxley planning enquiry.
An appraisal drill will cost £7 million. Possible full field development £50 million.
That's two numbers..as for the rest ..?

Good evening PennyorPound

We really do need to collect a decent OM award. Yes, FID is a key target but getting there and paying our costs and development share will need substantial funds we do not presently hold.

Remember ; the toxic Italian Junk gas assets have $14.2 m decommissioning liabilities and our management suggest these will be an issue after 2024.

From FID in, hopefully 2 years , to first oil is a LONG time.

Basically Rkh will have to fund raise again, somehow, in the future if we do not RECEIVE a large OM award payment.

Good afternoon LaticsRule

You wrote " I simply ask all holders to examine Sam’s stewardship and performance."

I do not know who was behind the rule change made months before MacDonald left that enabled him to leave and take 1p options with him.
The fact he left 6p options behind was not exactly encouraging in my book.
Who made that rule change call?

Just have to hope for the best going forward now.

InvesterInvester wrote;

"2pto 4p on good news quite possible.. imo.. VERY STRONG BUY imo"

That would mean UKOG's market cap be circa £353 Million at 2p or over £700m at 4p

Is that credible? Of course not.
UKOG is losing money, produces a dribble of oil and has already signalled another fund raise soon. To raise a couple of million pounds would require another 2.5 BILLION more shares IF they are placed at 0.8p.

So , with 20 billion shares potentially in issue soon , a share price of 2p would mean a market cap of £400m.

Its a ridiculous fantasy. Compare to other companies. I hold Genl (GENL). produces over 30,000 barrels a day and has circa $150million net cash. Is very profitable and pays big dividends . Its market acap is circa £387 million.

When you listen to Sanderson in the interview regarding the Hydrogen storage project (here; https://www.youtube.com/watch?v=qLFkt9iBijY ) you would think he was running a FTSE 100 oil company.

Its incredible; talking about the 'modest' planning costs 'a few million' as if it was nothing. Trouble is; UKOG have NOT got a few million.

Its nuts; a billion pound project several years away with no published projections as to potential profitability.

20.7.22 operational update extract;

"As part of the Company's Portland engineering and commercial studies it has now also received a preliminary economic model from Xodus, which details that the updated expected capital cost to construct the 14 salt caverns, related surface facilities and the pipeline tie-in to the current national gas grid is GBP895 million. Together with the capital expenditure for the envisaged LNG receiving terminal and the project's green hydrogen generation capability, the project's total cost will, therefore, likely exceed GBP1 billion.

The Company continues to talk to interested parties, potential contractors and potential strategic partners and to shape its vision for this new long-term project which is at the planning stage and remains subject to a number of conditions including planning consents and financing. A diagram illustrating the Company's current vision for Portland will be made available on the Company's website."

Where will the millions come from just to get this pie in the sky dream through planning?

Why can't Sanderson stick to getting one project right that actually may bring in a few hundred thousand pounds extra revenue in the nearer term , rather than these grandiose long lead time dream projects that costs eye watering amounts like hydrogen storage and geothermal.?

Good morning Ibug

Thanks for the link. I took a while looking at IGAS who are often touted as a potential farmin partner for UKOG. Thought about writing war and peace as to how I have come to my conclusion but though better of it. After looking at IGAS 2014 & 2021 CPR's ; their financials and commitments , as well as their stated strategy; the history of PEDL 235 and costs; I have formed an opinion its unlikely IGAS will farmin.

Also ; you would think that IF UKOG REALLY believed Loxley was a slam dunk, they would have financed a drill all by themselves; prove commerciality and easily obtain RBL to develop the asset.

I note this line from their operational update on trying to attract a farmin partner;

"The Company believes that this is the most prudent course of action to both manage uncertainty and to help ensure the best use of the Company's working capital."

'uncertainty' , "best use of the Company's working capital" Not much confidence shown there.

Its not to say that UKOG will not attract a farmin from someone else BUT, with on going public opposition and the financial risks ; I think UKOG are going to struggle with a Loxley farmin.

Good afternoon Mirasol . You wrote "Since 2014 they have drilled 2 exploration wells (HH1 & BBr), and a single appraisal well (HH-2 2z)"

That is not a great considering the over £54 Million raised in the last 5 years and Sanderson's plans.

In this December 2018 video; hTTps://www.youtube.com/watch?v=bLnqyjbokAg# a rather smug Sanderson outlined his plans; 9 wells in the next two years and production of 2,000 barrels a day by YE 2019.

Sanderson said "money doesn't seem to be a problem" .......Look what's happened since; the begging bowl out every year.
The under achievement , at enormous expense , has been staggering as has the ballooning number of shares.
Sanderson has hyped up too many times and delivered only failure yet is paid a fortune and was even awarded over £300k in a bonus.
There is a repeated theme with Sanderson; chasing drills in areas and in prospects others had considered and that no-one else wanted to pay for. Sanderson thinks he is a master geologist who has identified 'missed pay's' , missed opportunities. The Kimmeridge billions recoverable ; retiring to the Bahamas farce being his most ridiculous failure. The history was there; an area drilled over 50 times by major oil companies who 'missed' all that oil; BUT Sanderson found easy riches. lol. It was nuts . He peddles BIG numbers and big dreams that have come to naught. But he is not a fool for he refused to buy any shares in these dream projects until forced by the Sanderson Out campaign. He is a gambler; with others money and effectively admitted as such when he stated Basur was ' a roll of the dice'
There is a pattern of repeated failure and crazy 'new' shiny dream projects to excite the masses; only problem is; he needs more money, LOTS more money and asks again and again and again for stake money to gamble with.

Good afternoon ibug

That 2018 CPR is a must read; page 101 onwards gives a view on the gas prospects which reads much more down beat when compared to Sanderson's bigging up the potential.

Sanderson has a known record of hyping prospects from the Kimmeridge ( never mentioned now) to Arreton ( just been dumped from the portfolio). So when you hear big potential BCF numbers spouted one must carefully review the evidence.

In the 2018 UKOG presentation ;https://www.ukogplc.com/ul/UKOG%20Corporate%20Presentation%20Nov%202018..pdf
UKOG estimate "Gross 56 Bcf Portland gas in place"
Sounds fab , BUT there is a note declaring the number is a "UKOG internal P50 estimate" See page 19

So how could UKOG dream up such a number? It appears that there has been a re-interpretation of the data and Sanderson admitted as such in the Loxley planning enquiry.

Xodus completed the CPR in 2018 based on available data which was unable to estimate potential volumes and emphasised the need for an appraisal drill.
extracts;

"The dataset available, therefore, gives significant uncertainty in the assessment of in place volumes.."

"Recoverable volumes were not estimated at this time due to the inherent uncertainties."

The closest the 2018 CPR came to giving numbers was in this paragraph;

"Previous CPRs for IGas, the operator of PEDL235, have calculated estimates of Contingent Resource of between 5 and 10 bcf net to IGas. There is no comment on the discovery extending into PEDL234 and maps are cut off at the licence boundary."

The planning enquiry was revealing;
The enquiry questioner highlighted UKOG's submission that Xodus had estimated the ENTIRE deposit contained mean case recoverable resource of 44BCF with an upside case of 70BCF with approximately 78% within UKOG's licence.

Sanderson was questioned as to how, since that 2018 Xodus report could they NOW give the numbers he presented.
Sanderson admitted that the newer Xodus numbers came from a reinterpretation of the old legacy data aided by other consultants.
Sanderson stated they had no requirement to publish in full their data as its commercially sensitive.

Basically ; UKOG need to complete an appraisal . Will they be able to attract a farmin partner who will pay the £7m cost of that one drill?

Good afternoon fecm.

You wrote "I'm expecting a lot of positive spin - but we've all been there before!"

The road to potential first oil is still pretty long. After reviewing the numbers which include the $14.2 million decom. liabilities on the toxic Italian junk assets ; its clear that RKH will need a substantial further injection of capital to stand any chance of still being in the game for first oil a few years from now; likely 4 or 5 years imo, if we are lucky. The Italian junk decom will require expenditure after 2024.
The HOPE is that we will actually RECEIVE a LARGE OM award in time to avoid another raise. Will we win BIG and will we get paid promptly; NOT having to spend years chasing payment? There still remain so many hurdles and risks on route to eventual first oil.
This share has been a bit of a nightmare. How many times did we think we were on the verge of sanction when partnered with PMO?. Look back at 2018; everything was falling into place. PMO'S Robin Rose suggesting sanction at year end and oil hitting $80. Our share hit 40p plus. BUT, what happened? NOTHING. Thereafter there has been wild swings in POO and the jokers at PMO let us down.
PMO bled our coffers dry. I was aghast when SL pre-sanction costs for our 40% share ballooned to $19.3m in ONE year with more bills expected. We had to sell the Egyptian assets to feed useless PMO, who were going nowhere. If SL was near ready for sanction in 2018 ; why was such HUGE ( $19.3m PLUS) further expenditure required after that.? There appears to me to have been awful control of the finances, much blame resides with PMO BUT our team should not have let such lunatic expenditure get so out of control with NOTHING to show for it.

We are relying on Navitas sticking with us and that finance can be sorted. We are a long way from an agreed development plan and can not be sure that it could be decided that a third party will be required. How long would that take? Is there anyone likely to partner us?
Even MacDonald jumped ship leaving 6p options behind. However; there was a 'fortunate ' change in the rules to allow him as a former director; to take with him and later avail himself of 1p (ONE PENCE options) at a later date. How confidence inspiring is all that?

I have long decided NOT to invest any further cash in this company and will not be taking up the entitlements.

I hope that I will come to regret my decision to sit out the further dilution ; dilution which I don't like.

Hoping for a modest multibag...one day...one can but dream; trouble is there remains scenarios where we could still lose everything .

Regarding the costs of drilling wells ; BOR's 2012 annual report highlighted how much they spent then on 2 wells and may give a ball park indication of what wells MIGHT cost today.

hTTps://www.bordersandsouthern.com/media/pdf/Borders%20&%20Southern%20Petroleum%20plc_Annual%20Report%202012.pdf
Extract;

"After spending around $192m
in 2012, the company ended the year
with around $56m in cash deposits.
This is sufficient to fund the small
amounts still owing from the drilling
campaign, the existing 3D seismic
acquisition and ongoing overhead costs
for the foreseeable future. "

As for gas; The company plans reinjection of the gas and just take away the liquids.

I entirely agree that Genel's PR is very poor. As for the arbitration ; that will be a long drawn out business. Rockhopper (RKH) started theirs in 2017 on a no win no fee basis. I hold that share. Still awaiting the result which may arrive anytime now.

Arbitration via the courts is not particularly cheap; I have seen $8m USD being a total cost one can expect. I would think Genel would pay all fees themselves because no win no fee lawyers take a very large cut in a success case.

Just back in. I must apologize LaticsRule for my misspelling your moniker. No offence meant . Not the first time I have made a mistake.
I am but mortal , sorry.

Good afternoon LactisRule

You quote MOODY as saying " “it’s the financing that’s the key log jam with Sea Lion; and so I’ve come down to meet with the Government to try and see how we can help to facilitate that transaction going ahead."

I assume that is from the Penguin news article?

How can MOODY facilitate ? The FIG COULD facilitate with adjustments to the tax takes and their timing perhaps. That might reassure potential suppliers of finance.

Interesting times all-round with BOR POSSIBLY on the verge of a farmin at last. They were expected to refinance in January by an equity fund raise. Are they close to another source of funds as they have stated they are; " working on funding options for the next period of the Licences."?
"Options" is the interesting word. The most optimistic interpretation is there's more than one bidding to farmin. Ummm, would be surprised , but who knows. "options" is a word that could mean something else.
Time will tell.

Good morning Bootledodger

You wrote; "If the news is that "good"...why is there a sea of red in the market?"

Perhaps some do not consider it 'good news'

RKH were paying crazy sums every year in just predevelopment costs ; peaking at $19.3m USD. If HBR are still covering costs right up until the transaction completion when the loan kicks in ; that is good. RKH is very short of cash and every little helps. We really do not want to be carrying extra costs for 2 or 3 months until transaction completion.

Good morning to Neilius who wrote;

"It means we aren’t rid of Harbour yet…"

I actually view that as a good thing. I am hoping that means that Harbour will still be paying Sea Lion predevelopment costs right up to the "signing definitive documentation on the transaction "
If you recall the HOT as RNS'd on 8th December had this line;

"Rockhopper's share of Sea Lion costs from transaction completion up to Final Investment Decision ("FID") will be funded through a loan from Navitas with interest charged at 8% per annum (the "Pre-FID Loan")"

The loan kicks in from the transaction completion. We have to remember that SL predevelopment costs were enormous. If Harbour are still carrying that burden until the transaction completion that will save RKH a large amount of cash.

Reference the TDF. Listen to what MOODY said last September from 12 mins 30 Secs

hTTps://secure.emincote.com/client/rockhopper/retail-investor-presentation/index.html

At that time a potentially 'quite significant' decommissioning cost on a 40/60 basis was an issue.

In the 8th December RNS detailing the HOT with Navitas , this line referred to the TDF;

"Optionality for Temporary Dock Facility - scope to upgrade for Sea Lion development or future decommissioning "

It looks like the TDF will be retained for an extended period; I think the can has been kicked down the road on that front.